Crop insurance under attack

Armed with new data and an old playbook, environmentalists are taking aim at the crop insurance industry, seeking to bolster the case for a cap on premium subsidies when the Senate farm bill hits the floor in June.

At issue are government-backed premium discounts designed to make the insurance more affordable to farmers. While not truly cash subsidies, the costs have soared in recent years and fit neatly into the environmental narrative that Washington is too quick to help large-scale farm production at the expense of investments in conservation and the land itself.

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The Environmental Working Group, which successfully waged a similar campaign to end direct cash payments to farmers, is again taking the lead. On Thursday, the group released a wealth of new cost data gleaned from Freedom of Information requests filed with the Risk Management Agency, which oversees the multibillion-dollar program.

The names of the individual policyholders remain shielded by law, but the numbers offer the most complete picture yet of the distribution of benefits under the current system.

In 26 cases, policyholders received an annual discount — carried on the government’s books — of $1 million or more in 2011. In 10,152 cases, it was $100,000 or more, while the vast majority of farmers received far smaller discounts averaging closer to $5,000.

“The eye-opening analysis shows crop insurance is not only very expensive,” said Craig Cox, EWG’s senior vice president of agriculture and natural resources, “but also very, very generous to large and highly profitable farm businesses.”

Corn, soybeans, wheat and cotton are among the leading beneficiaries, just as they dominate American agriculture. At the same time, fruit and vegetable growers, which account for about one-fifth of farm receipts, are disproportionately represented since their crops tend to be high priced and therefore more likely subject to higher premiums.

Potatoes, tomatoes, apples, onions and grapes accounted for 36 percent of the high-end subsidies over $1 million, which carried some irony since environmentalists have long favored such specialty crops.

At a time of high deficits, the numbers are sure to increase pressure for more savings from the insurance program — or at least a cap on the level of discounts allowed any single producer.

“The big dogs reap the big benefits,” Ken Cook, EWG’s president, told reporters in a conference call. And already in the Senate, Majority Whip Dick Durbin (D-Ill.), from the heart of the Corn Belt, has signed on to a May 8 letter with Sen. Tom Coburn (R-Okla.) calling for some unspecified cap on the insurance subsidy.

Nonetheless, the Senate bill heads in the opposite direction, creating a variety of new, highly subsidized insurance options even as it ends the system of direct payments. The commodity title is cut significantly, but crop insurance expenditures would go up by at least $5 billion over 10 years, while the conservation title is cut by almost $6.4 billion.

EWG wants to slow this legislative train. It used similar data-mining tactics with great fanfare in its long campaign against direct cash payments. And in the crop insurance industry, it hopes to have found a similar foil.